UPDATE 4-Maduro government 'occupies' Venezuela electronics chain

Reuters Staff

6 Min Read

By Andrew Cawthorne and Carlos Rawlins

CARACAS, Nov 9 (Reuters) - Venezuelan President Nicolas Maduro’s socialist government “occupied” a chain of electronics stores on Saturday in a high-profile crackdown on what it views as price-gouging hobbling the country’s economy.

Authorities arrested various managers of the five-store, 500-employee Daka chain, sent soldiers into the shops, and forced the company to start selling products at cheaper prices.

That brought crowds of bargain-hunters to Daka outlets, and sparked looting at one store in the central city of Valencia.

“Inflation’s killing us. I‘m not sure if this was the right way, but something had to be done. I think it’s right to make people sell things at fair prices,” said Carlos Rangel, 37, among about 500 people queuing outside a Daka store in Caracas.

Maduro, who accuses rich businessmen and right-wing political foes backed by Washington of waging an economic “war” against him, said the occupation of Daka was simply the “tip of the iceberg” in a nationwide drive against speculators.

In a speech to the nation on Saturday evening, he condemned the looting reported in Valencia, but said it was an isolated incident and the real criminals were unscrupulous businessmen exploiting Venezuelans with unjustified price hikes.

“The ones who have looted Venezuela are you, bourgeois parasites,” Maduro said, accusing Daka of raising some prices of products beyond 1,000 percent of cost. He showed particular astonishment at a washing-machine on sale for 54,000 bolivars ($8,571 at the official exchange rate of 6.3 to the dollar).

“We’re going to comb the whole nation in the next few days. This robbery of the people has to stop,” Maduro said. “You’ve not seen anything. This is the just the little tip of the iceberg.”

At Daka’s flagship store in Caracas, soldiers organized hundreds of people into queues, making lists before calling them in one-by-one. Rangel had waited overnight, with various relatives, and was hoping to find a cheap TV.

In Valencia, Twitter users posted images of people running out of the Daka shop with TVs and boxes of goods.

Maduro’s measure, after weeks of warnings of a pre-Christmas push against private businesses to keep prices down, recalled the sweeping and often theatrical takeovers during the 14-year government of his predecessor, Hugo Chavez.

But Maduro, who took over in April after Chavez’s death from cancer, has stopped short of any more of the outright nationalizations that characterized his mentor’s rule.

Economic officials were fanning across Venezuela on Saturday, entering other shops to check prices in a pre-Christmas offensive by the government.

ELECTION LOOMS

Critics say Venezuela’s runaway inflation - the annual rate is now 54 percent, the highest since Chavez came to power in 1999 - is due to economic mismanagement and the failure of socialist policies rather than unscrupulous retailers.

Opponents say excessive government controls and persecution of the private sector are to blame for shortages of basic goods ranging from flour to toilet paper, and for price distortions and corruption caused by a black-market currency rate nearly 10 times higher than the official price.

“This ridiculous show they’ve mounted with Daka is a not-very-subtle warning to us all,” said one Venezuelan businessman who imports electronic goods and is an opposition supporter.

Under price controls set up a decade ago, the state sells a limited amount of dollars at 6.3 bolivars, but given the short supply, some importers complain they are forced into a black market where the price is nearly tenfold higher.

“Because they don’t allow me to buy dollars at the official rate of 6.3, I have to buy goods with black market dollars at about 60 bolivars, so how can I be expected to sell things at a loss? Can my children eat with that?” said the businessman, who asked not to be identified.

Maduro retains support from large sections of the population, particularly the poor who benefit from massive state welfare programs and who remain loyal to Chavez’s dying exhortation to support his chosen successor.

But the economic problems - in an OPEC country with the world’s largest oil reserves - have begun weighing on Maduro’s popularity, which dropped 10 points in recent months to 41 percent according to a recent survey by pollster Datanalisis.

The economy is the No. 1 issue going into local elections next month that are Maduro’s first test at the polls since narrowly beating opposition leader Henrique Capriles in the April presidential vote to replace Chavez.

Capriles is trying to cast the Dec. 8 nationwide municipal elections as a referendum on Maduro.

“Never in our history have we had anyone so incompetent in Miraflores,” Capriles tweeted on Saturday, referring to the presidential palace. “Everything Maduro does means more destruction of the economy and investor flight.”

Many economists are predicting a devaluation of Venezuela’s bolivar currency after the elections, perhaps in early 2014, but senior officials have repeatedly denied that.

“Venezuela’s immense resource base means it is not on the verge of collapse or default,” David Smilde, a sociology professor at the University of Georgia who has studied Venezuela for 20 years, said in a recent blog on the economy.

“But it is sliding into serious economic dysfunction and that could seriously undercut Chavismo’s viability as a democratically supported political project.”